Healthcare and Drugs in America
It is no secret that the cost of American healthcare is on the rise. Already the nation is spending about $1.65 trillion a year on healthcare. That represents 15 percent of gross domestic product, the total output of goods and services. It consumes one-fourth of the federal budget, more than defense. (Allan Rubin) This is due to the factors of expensive technology, less stringent HMO cost management, and more specifically to this paper, rapidly rising drug costs. Surveying nearly 3,000 employers, Mercer Human Resource Consulting finds that their health-benefit costs rose 10.1 percent this year, while inflation hovered around 2 percent.
And as the research and development of these drugs continue to outpace inflation, most Americans will continue to pay for this trend.
How so? There are two main reasons for this phenomenon. First of all the U.S has highly favorable patent laws toward these drug companies, prohibiting normal market competition for long periods of time. These monopolies allow manufacturers to charge several hundred percent above (world) market prices. (Dean Baker and Noriko Chatani) Some pharmaceutical companies have even been accused of delaying generic drug patents through litigation, even bribery in order to keep their drug prices high. It encourages a behavior of rent seekers. And these tactics prove highly lucrative. For example the drug Cardizem, used for blood pressure and hypertension reduction, had $700 million in sales in the 11 months the generic drug was kept off the market.
This also causes generic brands to rise in cost. According to IMS Health, pharmaceutical information companies, the price for generic drugs are increasing almost twice as fast as prices f...
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According to Harry A. Sultz and Kristina M. Young, the authors of our textbook Health Care USA, medical care in the United States is a $2.5 Trillion industry (xvii). This industry is so large that “the U.S. health care system is the world’s eighth
In the recent years the drug industry underwent a significant transformation. Many of the big companies generate high revenues, which allow them to expand. Some of them expand on their own others through mergers and the buying of smaller companies.
On a global scale, the United States is a relatively wealthy country of advanced industrialization. Unfortunately, the healthcare system is among the costliest, spending close to 18% of gross domestic product (GDP) towards funding healthcare (2011). No universal healthcare coverage is currently available. United States healthcare is currently funded through private, federal, state, and local sources. Coverage is provided privately and through the government and military. Nearly 85% of the U.S. population is covered to some extent, leaving a population of close to 48 million without any type of health insurance. Cost is the primary reason for lack of insurance and individuals foregoing medical care and use of prescription medications.
For the last five years of my life I have worked in the healthcare industry. One of the biggest issues plaguing our nation today has been the ever rising cost of health care. If we don't get costs under control, we risk losing the entire system, as well as potentially crippling our economy. For the sake of our future, we must find a way to lower the cost of health care in this nation.
Why do consumers purchase specific drugs for various ailments, sicknesses or diseases they might have? Why do physicians prescribe certain drugs over competitive drugs that may be available to the public? Why is it that most of us can easily name specific drugs that fit the many ailments of today’s society? On the surface the answer might be as simple as good TV advertising or radio commercials or even internet adds. The truth of matter is the major pharmaceutical manufacturers own the patents on these drugs and this gives them all of the marketing budget and muscle they need to promote the drug and control the pricing. The incentives for larger pharmaceutical companies are very enticing and as a result, they don’t mind spending the time in clinical trials and patent courts to get their drugs approved. Some will even get patents on the process by which the drug is manufactured, ensuring that no competitor can steal the drug or the process. This protects their large financial investment and nearly guarantees a large return for their investors. Many consumer rights groups claim this is nothing more than legalizing monopolies for the biggest manufacturers.
Prescription drug prices rose three times faster than inflation in the decade between 1981 and 1991, making the pharmaceutical industry the nation's most profitable business. Prescription drugs even exceeded the rapidly rising inflation rate for all other medical services. They now represent at least 10% of all the medical costs in the United States.1
In order to make ones’ health care coverage more affordable, the nation needs to address the continually increasing medical care costs. Approximately more than one-sixth of the United States economy is devoted to health care spending, such as: soaring prices for medical services, costly prescription drugs, newly advanced medical technology, and even unhealthy lifestyles. Our system is spending approximately $2.7 trillion annually on health care. According to experts, it is estimated that approximately 20%-30% of that spending (approx. $800 billion a year) appears to go towards wasteful, redundant, or even inefficient care.
According to Western scholars, the religious tradition that we know as Hinduism is the product of at least 5,000 years of development, with roots stretching back to the Indus Valley civilization, which prospered some 4 - 5,000 years ago. However, the origins of this religion are shrouded in mystery and according to Hindu scriptures may be millions of years old. Lord Shiva is called the Destroyer and Re-creator, The universes were made by Lord Brahma the Creator, cleansed by Lord Vishnu the Preserver and destroyed by Lord Shiva. After each world is destroyed it is left with a vast ocean. Resting on the great snake Ananta, is Lord Vishnu. Som...
Due to patents, Pfizer and other companies in the pharmaceutical industry are not always competing in a monopolist’s competition. When a business has a patent, they are the only manufacturer who can produce the product until the product expires, so it is clear that the firm can act as a monopoly while in control of the patent. As a monopolistic company, the company has market power, giving it the capability to adjust the market price of a good. The main goal for a monopolist and business owner is to maximize their profits, however, there are rules they have to abide by. Monopoly companies still have to keep up with the market demand curve.
Synthesis question: what factors are contributing to the demies of the American health care system?
There will also be a health exchange program for individuals who cannot afford employer insurance (Estes, Chapman, Dodd, Hollister & Harrington, 2013). This exchange program will include several changes such as limiting deductibles and waiting periods for coverage. The health exchange program will include a selection of different healthcare plans that the individuals can choose from that is said to be more affordable. The health exchange option will only be available to U.S. citizens and legal immigrants. There will be several changes to private insurance providers that will include several regulations for example, there will be no lifetime limits on coverage. Small businesses will also be able to purchase health insurance for their employees through this reform. Small businesses that provide their employees insurance will also be able to receive tax credits under certain conditions. Estes, et al (2013) states that employers with 50 or greater employees will face fees if even one employee buys insurance through the exchange. Employees that work for large businesses that do not sign up for coverage or say that they do not want any coverage will automatically be enrolled into the lowest costing plan by the employer. This reform is also going to introduce wellness programs into healthcare plans. For examples small businesses will be able to offer their employees rewards for participating in wellness programs by meeting certain health goals (Collin, 2012). The wellness programs will work towards keeping individuals in good health by offering the following programs for example: weight loss, smoking cessation and classes on nutrition.
Rising medical costs are a worldwide problem, but nowhere are they higher than in the U.S. Although Americans with good health insurance coverage may get the best medical treatment in the world, the health of the average American, as measured by life expectancy and infant mortality, is below the average of other major industrial countries. Inefficiency, fraud and the expense of malpractice suits are often blamed for high U.S. costs, but the major reason is overinvestment in technology and personnel.
The U.S. expends far more on healthcare than any other country in the world, yet we get fewer benefits, less than ideal health outcomes, and a lot of dissatisfaction manifested by unequal access, the significant numbers of uninsured and underinsured Americans, uneven quality, and unconstrained wastes. The financing of healthcare is also complicated, as there is no single payer system and payment schemes vary across payors and providers.
In addition to this, pharmaceutical companies can also regulate the price of the drug as they will be the only company selling that drug. However, these aspects of patents can adversely affect the generics industry. The generics industry cannot make or sell drugs that are patented but once a patent licence expires, both the generics industry and the WHO see increased benefits as drugs become more widely available around the world (i.e. developing countries) at a lower price. Here we will discuss the pros and cons of patents from the point of view of the pharmaceutical industry, the generics industry and the WHO. As we said above, patents grant exclusive rights to an invention or a process of making and invention.
The cost of US health care has been steadily increasing for many years causing many Americans to face difficult choices between health care and other priorities in their lives. Health economists are bringing to light the tradeoffs which must be considered in every healthcare decision (Getzen, 2013, p. 427). Therefore, efforts must be made to incite change which constrains the cost of health care without creating adverse health consequences. As the medical field becomes more business oriented, there will be more of a shift in focus toward the costs and benefits, which will make medicine more like the rest of the economy (Getzen, 2013, p. 439).